S&P QUEASY ON CA. W/C
Standard & Poor's (S&P) has placed its ratings on several insurance companies with significant exposure to the California workers' comp market on CreditWatch with negative implications. These rating actions, combined with recent negative rating actions taken on Fremont General Corp. and related entities, reflect S&P's concern about the reserve adequacy of these individual insurers. Supporting S&P's concerns is a recent study conducted by the Workers' Compensation Insurance Rating Bureau of California, which indicates a gross loss reserve deficiency of $4.7 billion for the California w/c market. The insurers placed on CreditWatch include: Zenith Insurance and several subsidiaries; State Compensation Insurance Fund; Argonaut Insurance Co.; and Georgia Insurance Co.
NO MORE IPO
Reliance Surety Group has asked Securities and Exchange Commission (SEC) regulators to withdraw its proposal for an initial public offering. The back-tracking is a result of the parent company's recent deal with Travelers Casualty and Surety Co. to sell off its surety and fidelity business. Reliance Group Holdings made the agreement with Travelers in late February for approximately $580 million. Reliance Surety had filed its IPO plans with the SEC in late October 1999, and had planned to raise as much as $100 million.
BITTEN BY THE LOVE BUG
The recent "Love Bug" computer virus has generated a lot of speculation over the extent of the losses caused to business, and to what extent they were covered by insurance. The impact could include cluttered e-mail in-boxes, Web site crashes, lost revenue and corrupted data. Total damages from the virus, which encompass expenses to cleanse and reinstall affected systems, downtime and lost business, plus potential lawsuits for ineffective or deficient safeguards, could reach $15 billion by some estimates. Lloyd's, who has initiated several e-commerce coverages recently, is calling "Love Bug" type viruses "the biggest insurance risk of the 21st century."
E-Z ACQUISITION
Efinancial depot.com has signed a letter of intent to acquire eZnow insurance.com, a Web page that offers a wide range of insurance services online, including life, home, rental, commercial, auto, boat, casualty and health policies. EZnow insurance.com is the online customer interface for Kovatch Insurance Services, headquartered in Los Angeles and licensed as a broker in Arizona, California, Colorado and Florida. Kovatch will continue to operate independently as an insurance brokerage upon completion of the acquisition of eZnow. The agreement provides for a purchase price of 50,000 restricted shares of FDPO stock, plus provisions.
GENERAL RE-EVALUATION
General Re Corporation, a wholly owned subsidiary of Berkshire Hathaway Inc., completed its analysis of strategic alternatives for General Re Financial Products (GRFP), determining that it will resume its activities with some changes. Berkshire Chairman Warren Buffett said he "unequivocally" supports the business plan, and has "complete confidence" in the management's ability to deliver. GRFP has a "AAA" counterparty credit rating from Standard & Poor's.
HELPING THE DISABLED
We Media, a multimedia company designed specifically for the estimated 54 million Americans with disabilities, their families and friends, selected KinsuranceCenter.com, the online subsidiary of Kaye Group Inc., to help develop a full-service insurance channel. We Insurance will provide answers to insurance-related questions as well as direct access to all types of insurance, including life, medical, long-term care, dental, auto, homeowners and businessowners policies. In addition, users of We Insurance will have access to online and offline support throughout the entire transaction.
